10-Q 1 g4656a.txt QTRLY REPORT FOR THE QTR ENDED 10-31-10 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2010 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 000-53847 PEPPER ROCK RESOURCES CORP. (Exact name of registrant as specified in its charter) NEVADA (State or other jurisdiction of incorporation or organization) 8200 Wilshire Blvd, Suite 200 Beverly Hills, CA 90211 (Address of principal executive offices, including zip code) 323-556-0780 (Telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer [ ] Accelerated Filer [ ] Non-accelerated Filer [ ] Smaller Reporting Company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 315,157 as of December 18, 2010. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Pepper Rock Resources Corp. (An Exploration Stage Company) October 31, 2010 Index ----- Balance Sheets (Unaudited)................................................ 3 Statements of Expenses (Unaudited)........................................ 4 Statements of Cash Flows (Unaudited)...................................... 5 Notes to Unaudited Financial Statements .................................. 6 2 Pepper Rock Resources Corp. (An Exploration Stage Company) Balance Sheets (Unaudited)

~~April~~October 3031, July 31, 2010 ~~2009~~2010 ------------ ------------ ASSETS Current Assets Cash $ 716,~~519~~228 $ ~~590~~1,045 ~~Prepaid expenses 350 350~~ --------- ---~~------~~ ~~Total Current Assets 7,869 940 Oil and gas properties (successful efforts method of accounting) 300,000~~ -- --------- -~~--------~~ Total Assets $ ~~307~~16,~~869~~228 $ ~~940~~1,045 ============ ============ LIABILITIES AND STOCKHOLDERS' ~~EQUITY (~~DEFICIT) Current Liabilities Accounts payable and accrued liabilities $ 2870,~~404~~386 $ 753,~~257~~452 ~~Loan~~Loans payable 24,340 124,~~000~~340 Due to related party 1615,~~974~~027 ~~184~~3,027 Convertible note 325,000 300,000 ------------ ------------ Total Liabilities 69434,~~718~~753 8380,~~441~~819 ------------ ------------ Stockholders' ~~Equity (~~Deficit) Preferred Stock, 100,000,000 shares authorized, $0.00001 par value; No shares issued and outstanding ~~as of April 30, 2010 & July 31, 2009~~ -- -- Common Stock, 2,500,000,000 shares authorized, $0.00001 par value; 57315,~~800,000~~157 shares issued and outstanding as3 of3 ~~April 30, 2010 & July 31, 2009 578 578~~ Additional Paid-in Capital 64651,~~522~~666 62626,~~122~~666 ~~Common Stock Subscribed 300,000 --~~ Deficit Accumulated During the Exploration Stage (~~126~~1,~~949~~070,194) (701,~~201~~006,443) ------------ ------------ Total Stockholders' ~~Equity~~Deficit (~~Deficit~~418,525) ~~238,151~~ (7379,~~501~~774) ------------ ------------ Total Liabilities and Stockholders' ~~Equity (~~Deficit) $ ~~307~~16,~~869~~228 $ ~~940~~1,045 ============ ============

(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements) 3 Pepper Rock Resources Corp. (An Exploration Stage Company) Statements of Expenses (Unaudited)

~~From~~ For the ~~three months ended~~ For the ~~nine~~From ~~months~~Three ~~ended~~Months Three Months May 29, 2008 ~~April~~Ended ~~30,~~Ended ~~April 30,~~ (Date of Inception) ~~--------------------------~~to ~~--------------------------~~October to31, ~~April~~October 3031, ~~2010~~October ~~2009~~31, 2010 2009 2010 ----------- -~~----------~~ ------------ ----------- -~~---------~~ Expenses Other general and administrative $ ~~4,265 $ 1,083 $~~ 6,~~418~~038 $ ~~4,892~~871 $ 13139,~~614~~309 Management services 12,000 1,200 1444,~~400 3,600 20,~~000 Professional fees 1715,~~284~~252 313,~~358~~860 35116,~~790~~230 ~~28,373~~Loss 84on settlement of accounts payable -- -- 106,~~900~~179 Impairment of mineral properties -- -- 5,000 Impairment of oil and gas properties -- -- 5300,000 Exploration costs -- -- 140 ~~295 3~~20,~~435~~935 ----------- -~~----------~~ ------------ ----------- -~~---------~~ ~~Total~~Loss ~~Expenses~~from $operations (33,~~549~~290) ~~$ 5~~(16,~~641~~071) ~~$ 56~~(731,~~748~~653) $Interest ~~37,160~~expense ~~$ 126~~(30,~~949~~461) --~~---------~~ (338,541) ------------ ------------ ----------- -~~---------~~ Net Loss for the Period $ (3363,~~549~~751) $ (516,~~641~~071) $ (561,~~748) $ (37~~070,~~160~~194) ~~$ (126,949)~~ =========== =~~==========~~ ============ =========== =~~=========~~ Net Loss Per Common Share - Basic and Diluted $ (0.0020) $ (0.0006) ~~$ (0.00) $ (0.00)~~ =========== =~~==========~~ =========== =~~==========~~ Weighted Average Common Shares Outstanding 57315,~~800,~~000 57289,~~800,~~000 ~~57,800,000 57,800,000~~ =========== =~~==========~~ =========== =~~==========~~

(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements) 4 Pepper Rock Resources Corp. (An Exploration Stage Company) Statements of Cash Flows (Unaudited)

For the For the From ~~Nine~~Three Months ~~Nine~~Three Months May 29, 2008 Ended Ended (Date of Inception) ~~April~~to 30October 31, ~~April~~October 3031, toOctober ~~April 30~~31, 2010 2009 2010 ------------ ------------ ------------ ~~OPERATING~~Operating ~~ACTIVITIES~~Activities Net loss for the period $ (5663,~~748~~751) $ (3716,~~160~~071) $ (~~126~~1,~~949~~070,194) Adjustment to reconcile net loss to net cash used in operating activities: Donated services ~~2,400~~-- 31,~~600~~200 8,000 Accretion of convertible debt discount 25,000 -- 325,000 Shares issued for services - related party -- -- 112,891 Shares issued for services -- -- 106,178 Impairment of mineral properties -- -- 5,000 ~~Changes~~Impairment inof ~~operating~~oil ~~assets~~ and ~~liabilities:~~gas ~~Prepaid~~properties ~~expenses~~-- -- ~~(222)~~300,000 ~~(350)~~Changes in operating assets and liabilities: Accounts payable and accrued liabilities 2116,~~147~~934 114,~~261~~669 2888,~~404~~886 Due to related ~~party,~~parties - services 12,000 -- 12,000 ------------ ------------ ------------ Net Cash Used in Operating Activities (219,~~201~~817) (~~32,521~~202) (73111,~~895~~239) ------------ ------------ ------------ ~~INVESTING~~Investing ~~ACTIVITIES~~Activities Mineral property costs -- -- (5,000) Oil and ~~Gas~~gas property costs ~~(300,000)~~-- -- (300,000) ------------ ------------ ------------ Net Cash Used in Investing Activities ~~(300,000)~~-- -- (305,000) ------------ ------------ ------------ ~~FINANCING~~Financing ~~ACTIVITIES~~Activities ~~Bank~~Due ~~overdraft~~to related parties, advances -- 46 -- ~~Loan~~27,027 ~~payable~~Proceeds 23from convertible debt 25,~~340~~000 -- 24325,~~340~~000 ~~Due~~Proceeds tofrom ~~related~~other ~~parties,~~loans ~~advances~~-- ~~4,790~~-- ~~59 4~~33,~~974~~340 Proceeds from issuance of common stock -- -- 57,100 ~~Common~~Payment ~~stock~~of ~~subscribed~~advances ~~300,000~~-- -- ~~300~~(10,000) ------------ ------------ ------------ Net Cash Provided by Financing Activities ~~328~~25,~~130~~000 ~~105~~-- ~~386~~43,~~414~~467 ------------ ------------ ------------ Increase (Decrease) in Cash 615,~~929~~183 (~~32,416~~202) 716,~~519~~228 Cash - Beginning of Period ~~590 32~~1,~~793~~045 590 -- ------------ ------------ ------------ Cash - End of Period $ 716,~~519~~228 $ ~~377~~388 $ 716,~~519~~228 ============ ============ ============ Supplemental Disclosures Interest paid $ -- $ -- $ -- Income taxes paid $ -- $ -- $ -- ============ ============ ============ Non-Cash Activities Conversion feature of convertible note $ 25,000 $ -- $ 350,000 Settlement of related party debt with common stock $ -- $ -- $ 25,000 Settlement of debt with common stock $ -- $ -- $ 17,500 ============ ============ ============

(The Accompanying Notes are an Integral Part of These Unaudited Financial Statements) 5 Pepper Rock Resources Corp. (An Exploration Stage Company) Notes to the Financial Statements October 31, 2010 (Unaudited) 1. Significant Accounting Policies and Basis of Presentation Pepper Rock Resources Corp. (the "Company") was incorporated in the State of Nevada on May 29, 2008. The Company is an Exploration Stage Company, as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, DEVELOPMENT STAGE ENTITIES. The Company's principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable. The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's July 31, 2010 report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end July 31, 2010 as reported on Form 10-K, have been omitted. 2. Going Concern These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. At October 31, 2010, the Company has accumulated losses since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 3. Related Party Transactions a) For the three month period ended October 31, 2010, the Company recognized $nil (2009 - $1,200) for donated services provided by the President of the Company. During the three month period ended October 31, 2010, the Company incurred $12,000 of management services provided by the President of the Company pursuant to the management agreement described in Note 7. As of October 31, 2010, the Company is indebted to the President of the Company in the amount of $15,027 (July 31, 2010 - $Nil), consisting of $3,027 (July 31, 2010 - $2,843) for expenses paid on behalf of the Company and $12,000 (July 31, 2010 - $nil) for management fees. This amount is non-interest bearing, unsecured and due on demand. b) As at October 31, 2010, the Company is indebted to the former President of the Company for $184 (July 31, 2010 - $184) for expenses paid on behalf of the Company. This amount is non-interest bearing, unsecured and due on demand. 6 Pepper Rock Resources Corp. (An Exploration Stage Company) Notes to the Financial Statements October 31, 2010 (Unaudited) 4. Loan Payable As at October 31, 2010, the Company owed $24,340 (July, 2010 - $24,340) in loans payable to unrelated third parties. These amounts were used for general corporate expenses. These amounts are unsecured, bear interest of prime bank rate plus 3% per annum and are payable on demand. 5. Convertible Debt During the fiscal year ended July 31, 2010, the Company issued a $300,000 secured Convertible Note ("the Note"). The Note is due sixty days after demand, bears interest of prime bank rate plus 3% per annum payable annually and is convertible into shares of common stock at $0.01 per share. The conversion feature of the convertible note provides for a rate of conversion that is below market value. This feature is characterized as a beneficial conversion feature ("BCF"). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20. The BCF of $300,000 was recognized immediately as interest expense due to the fact that the convertible note is due upon demand. During the period ended October 31, 2010, the Company received $25,000 pursuant to a secured Convertible Note ("the Note"). Subsequent to October 31, 2010, the Company received an additional $25,000. Both of these loans are evidenced by a single convertible note agreement totalling $50,000. The Note is due sixty days after demand, bears interest of prime bank rate plus 1% per annum payable annually and is convertible into shares of common stock at $0.01 per share. The conversion feature of the convertible note provides for a rate of conversion that is below market value. A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20. During the period ended October 31, 2010, the Company recognized a BCF related to the $25,000 received during the period. The full amount was recorded as a discount at the inception of the note and was immediately expensed as interest expense due to the fact that the convertible note is due upon demand. 6. Subsequent Event On November 17, 2010, the Company effected a 200:1 reverse stock split of the authorized, issued and outstanding common stock. As a result, the authorized share capital decreased from 500,000,000 shares of common stock to 2,500,000 shares of common stock with no change in par value and the outstanding share capital decreased from 63,031,388 shares of common stock to 315,157 shares of common stock. All share amounts have been retroactively adjusted for all periods presented. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. This section of the report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. RESULTS OF OPERATIONS / PLAN OF OPERATION We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business activities. We have not generated any revenue and have incurred losses since inception. In addition, we have a working capital deficit at October 31, 2010. These factors raise substantial doubt regarding the Company's ability to continue as a going concern for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated at present. Accordingly, we must raise cash from sources other than the sale of minerals and oil and gas found on the properties. Our only other sources for cash at this time are loans from related parties and additional sales of common stock. Our success or failure will be determined by what additional financing we obtain and what we find under the ground. Funds raised from our recent Promissory Note issued were used to pay administrative and other expenses. We have to raise additional money to explore natural resource properties in the future. If we find oil and gas, or other minerals, and it is economically feasible to remove the mineralized material or the drilling of oil and gas, we will attempt to raise even more money through a subsequent private placement, public offering or through loans. Our sole officer and director is unwilling to make any commitment at this time to loan us money. At the present time, we have not made any arrangements to raise additional cash. If we need additional cash and cannot raise it, we will either have to suspend activities until we do raise the cash, seek additional opportunities, or cease activities entirely. Other than as described in this paragraph, we have no other financing plans. On February 10, 2010 we entered into a joint venture agreement with Oxalis Energy Group, Inc. for an exclusive right to participate in Oxalis' natural gas project at the Adams - Baggett Ranch near Ozona, Texas. Under the terms of the agreement we committed to investing an aggregate of $5,300,000 into the development of the property. An initial payment of $300,000 was made and consequent payments of $500,000 every month were required in order to fulfill our obligations under this agreement. The initial payment of $300,000 was used for the re-activation of two natural gas wells on the property and the acquisition of a 50% working interest in these wells. However, the Company did not make the monthly payments of $500,000 and is in default of its agreement with Oxalis. As such, the Company has no right, title or interest in the Adams-Baggett Ranch joint venture with Oxalis Energy Group. The Company also recorded a $300,000 impairment of oil and gas properties for the initial payment. As of the date hereof, we do not own any property interests. We are currently seeking suitable natural resource property opportunities. Although our company was unsuccessful in raising the funds to complete the Oxalis natural gas project, we may identify alternate natural resource properties which are suitable for exploration and development. Although we are searching for such 8 opportunities, we have not entered into any definitive agreements to date and there can be no assurance that we will be able to enter into any definitive agreements. We anticipate that any new opportunities will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation and enter into such an agreement. If our company requires additional financing and we are unable to acquire such funds, our business may fail. Even if we are able to enter into a business opportunity and obtain the necessary funding, there is no assurance that any revenues would be generated by us or that revenues generated would be sufficient to provide a return to investors. As of the date hereof, management has not entered into any formal written agreements for new resource property opportunities. When any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission. We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. The investigation and analysis of natural resource opportunities that may be available may be extremely difficult and complex. We can provide no assurance that we will be able to locate compatible business opportunities. If we can't or don't raise more money, we will either cease activities or look for other opportunities. If we cease activities, we don't know what we will do and we don't have any plans to do anything. We do not intend to hire additional employees at this time. All of the work on the properties will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, drilling and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material and/or the oil and gas. We have nominal cash at the present time and cannot operate until we raise additional capital. LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from activities. We cannot guarantee we will be successful in our business activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration and drilling of our properties, and possible cost overruns due to price and cost increases in services. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders. LIQUIDITY AND CAPITAL RESOURCES Since inception, we have issued 315,157 shares of our common stock and received $444,467. As of the date of this report, we have conducted limited operations and therefore have not generated any revenues. In May 29, 2008, we issued 162,500 shares of common stock to our former officer and director, Curtis C. Daye. The purchase price of the shares was $6,500. This was accounted for as an acquisition of shares. Curtis C. Daye covered some of our initial expenses by paying $184 for incorporation documents, administrative costs, and courier costs. The amount owed to Mr. Daye is non-interest bearing, unsecured and due on demand. Further, the agreement with Mr. Daye is oral and there is no written document evidencing the agreement. 9 On July 8, 2008, we issued 126,500 shares of common stock to 46 individuals in consideration of $50,600. On July 1, 2010, the Company issued to the President of the Company 13,789 shares of common stock at a fair value of $0.55 per share for $25,000 owed in management fees paid on behalf of the Company by the President. On July 8, 2010, the Company issued 12,368 shares of common stock to settle $17,500 of accounts payable, which was related to certain consulting services provided by Resource Management Services, an unrelated party. As of October 31, 2010, our total assets were $16,228 and our total liabilities were $434,753. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. ITEM 4. CONTROLS AND PROCEDURES. Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that these disclosure controls and procedures are not effective due to adjustments found by independent auditor during the interim periods. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no changes in our internal controls over financial reporting that occurred during the three months ended July 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS. The following documents are included herein: Exhibit No. Document Description ----------- -------------------- 31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 21st day of June, 2010. PEPPER ROCK RESOURCES CORP. December 14, 2010 BY: /s/ Phil Kueber ------------------------------------------------ Phil Kueber President, Chief Executive Officer, Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer, and sole member of the Board of Directors. 12 EXHIBIT INDEX Exhibit No. Document Description ----------- -------------------- 31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

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